General Maritime Corporation Q4 2008 Earnings Call Transcript

| About: General Maritime (GMRRQ)

General Maritime Corporation (NYSE:GMR)

Q4 2008 Earnings Call

February 26, 2009 10:00 am ET


Brian Kerr - Investor Relations

John Tavlarios – President

Peter Georgiopoulos - Chairman

Jeff Pribor- Chief Financial Officer

John Georgiopoulos - Chief Administrative Officer

Peter Bell –Head of Commercial Operations


Doug Mavrinac - Jefferies & Company

Natasha Boyden - Cantor Fitzgerald

Daniel Burke – Clarkson Johnson

Scott Burk - Oppenheimer & Co.


Good morning everyone and welcome to the General Maritime Corporation conference call to discuss the company’s 2008 fourth quarter and full year results. Today’s call is being recorded. We will conduct a question and answer session after the opening remarks and instructions will follow at that time.

A replay of the call will be accessible any time during the next two weeks by dialing 888-203-1112 for US callers, and 719-457-0820 for non-US callers. To access the replay please enter the passcode 5237457.

At this time I would like to turn the call over to Mr. Brian Kerr.

Brian Kerr

Welcome, ladies and gentlemen, to the General Maritime Corporation conference call to discuss the company’s 2008 fourth quarter and full year results. I would like to remind everyone that this conference call is now being webcast on the company’s website, There are additional materials related to our earnings announcement, including a slide presentation on our website.

You should be aware that during today’s conference call we will be making certain forward-looking statements that discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements. For a discussion of factors that could cause results to differ, please see the company’s press release that was issued yesterday and the company’s filings with the Securities and Exchange Commission, including, without limitation, the company’s annual report on Form 10-K for the year ended December 31, 2007 and its subsequent reports on Form 10-Q and Form 8-K.

All share and per share amounts discussed in this conference call, unless otherwise noted, have been adjusted to reflect the exchange of 1.34 shares of our common stock for each share of common stock held by our shareholders of General Maritime subsidiary, our predecessor company, in connection with the Arlington combination.

Now I’d like to introduce Mr. John Tavlarios, President of General Maritime Corporation.

John Tavlarios

Good morning. Welcome to General Maritime’s earning conference call for the fourth quarter and full year 2008. With me today are Peter Georgiopoulos, Chairman; Jeff Pribor, Chief Financial Officer; John Georgiopoulos, Chief Administrative Officer; and Peter Bell, Head of Commercial Operations.

As outlined on Slide 3 of the presentation, I’ll begin today’s call by discussing the highlights of the quarter and year followed by Jeff’s review of our financial results for the three months and full year ended December 31, 2008.

Following this, I’ll provide some remarks on our company outlook and an overview of the industry. We’ll then be happy to take your questions.

I’ll begin on Slide 4. 2008 was an important year for General Maritime as the company posted strong financial results and continued to meet its dividend target. Complementing these notable achievements, we also furthered our tradition of entering into transactions that we believe create long term value for shareholders.

We are pleased to have continued to consolidate the industry, achieving substantial fleet growth during a challenging economic and credit environment by adhering to our strict return criteria and without increasing the company’s leverage.

In terms of our financial performance, we recorded adjusted net income of $19.3 million or $0.47 basic and $0.45 diluted earnings per share for the fourth quarter and $74.7 million or $1.89 basic and $1.84 diluted earnings per share for the full year.

These results exclude one-time gains and losses from our freight derivative instruments, compensation accruals in connection with the company’s executive transition plan, as well as litigation costs in connection with the Genmar Defiance litigation.

Jeff will discuss our financial results in more detail later on in the call.

With respect to the fourth quarter, we are pleased to have once again declared a $0.50 per share quarterly dividend. Including the fourth quarter dividend, General Maritime has now declared cumulative quarterly and special dividends in excess of $1 billion.

In addition to providing shareholders with sizable fixed quarterly distributions, General Maritime’s ongoing dividend policy continues to serve as a core differentiator for the company for a number of reasons. First, the dividend target is supported by a sizable contracted revenue stream.

Second, our dividend target of $2.00 per share for new General Maritime shares is based on a partial payout structure which retains capital for growth and which we believe provides the company with financial flexibility for the future.

Turning to Slide 5, we provide a chart that details our physical time charter coverage. With the completion f the Arlington tankers combination in December 2008, General Maritime has further increased the company’s contracted revenue stream. Currently the company has 23 vessels and one vessel equivalent on a fixed time charters, representing 77% time charter coverage and $250 million in contracted revenue for 2009.

General Maritime’s success increasing its time charter coverage during 2008 has enabled the company to achieve important objectives. Specifically, the company has enhanced its position to maximize cash flow and achieve a level of stability and results over the near term. The company has also expanded and extended its sizable contacted revenue stream over the next four years.

In total, General Maritime has approximately $450 million in contracted revenue through 2013, including approximately $200 million for the current year.

Before turning the call over to Jeff, I’d like to briefly discuss the completion of the Arlington tankers combination. On December 16, 2008, shareholders of both companies approved the stock-for-stock combination. The combination resulted in General Maritime shareholders owning approximately 73% of a larger, more diverse tanker company with enhanced potential for the future.

In successfully completing this combination, management used its stock as a valuable currency to create a company which is of a size and scope and with a dividend structure, balance sheet, chartering strategy, and vision that we believe positions the company well for the future.

The combination resulted in significant benefits for General Maritime and its shareholders. First, General Maritime expanded its modern double-hull fleet in both new and existing sectors, positioning the company to further augment its commercial prospects with current customers and new charters.

Second, the company strengthened its platform for creating near term value through generating stable cash flows and distributing dividends to shareholders.

Finally, General Maritime solidified its healthy financial position, further distinguishing the company and the industry and positioning it to achieve fleet earnings and dividend growth over the long term.

I’d like now to turn the call over to Jeff.

Jeff Pribor

Thank you, John, and good morning everybody. Beginning on Slide 7, I’d like to review our fourth quarter financial results. For the fourth quarter of 2008, excluding the $3.2 million of other gain and $34 million in compensation accruals in connection with the company’s executive transition plan, as well as litigation costs in connection with the Genmar Defiance litigation, the company recorded net income of $19.3 million or $0.47 basic and $0.45 diluted earnings per share for the three months ended December 31, 2008.

Net loss on a GAAP basis was $11.5 million or $0.28 basic and $0.28 diluted loss per share for the three months ended December 31, compared to net income of $5.2 million or $0.13 basic and $0.13 diluted earnings per share for the three months ended December 31, 2007.

The decrease in net income was principally the result of increased G&A expense for Q4 2008. Included in the G&A was the compensation accrual described above for $30.5 million and respect of termination and bonus obligations in connection with the termination of our former Chief Executive Officers Employment Agreement with the company and a payment in lieu of bonus for 2008 at the time of the completion of the Arlington tankers transaction.

These expenses also included the litigation costs described above for $4 million in connection with the Genmar Defiance litigation reflecting potential fines and penalties as well as legal fees and expenses and a write off of insurance claims. Also contributing to the decrease in net income was an increase in direct vessel expenses.

Other gain for the quarter was $3.2 million which included a $4.8 million unrealized non-cash gain associated with the change in fair value of our freight derivatives as well as a $1.3 million loss associated with the monthly cash settlements of our freight derivatives and $0.3 million of additional other expense.

To analyze revenue we look at net voyage revenue per vessel day referred to as time charter equivalent or TCE. TCE is calculated by dividing net voyage revenues by voyage days for the applicable time period. You’ll find a number of voyage days used in this computation in the appendix to our press release.

On Slide 8, we provide a fourth quarter 2008 TCE analysis. Full fleet TCE including time charters increased 4.3% to $33,909 for the quarter ended December 31, 2008 compared to $32,510 for the prior year period. The TCE earned by our spot Aframax vessels decreased by 1.6% to $29,908 for the quarter ended December 31, 2008 from $30,408 for the prior year period, while our spot Suezmax vessel increased 122% to $37.573 from $16,878 in the prior year period.

The TCE earned by our time charter Aframax vessels increased 17.7% to $32,704 a day for the quarter ended December 31, 2008 from $27,776 for the prior year period while our time charter Suezmax vessels remain relatively flat at $37,379 a day from $37,194 in the prior year period.

Excluding the compensation accruals and litigation costs previously described, EBITDA was $47.6 million for the quarter ended December 31, 2008 versus $25.7 million for the quarter ended December 31, 2007.

Depreciation and amortization for the quarter ended December 31, 2008 was $16.7 million compared to $12.6 million for the quarter ended in 2007. This increase is primarily attributable to the delivery of one Suezmax, two Aframax, and the vessels with the Arlington transaction. Our net interest expense increased to $8.4 million during the quarter ended December 31, 2008 compared to $7.9 million from the prior year period.

I’d now like to discuss our balance sheet which is detailed on Slide 9. As of December 31, 2008, our cash position was $104.1 million and our debt was $990.5 million. Net of certain banking, legal, and compensation expense which was accrued in Q4 2008 but paid in January 2009, our cash position would be approximately $80 million pro forma as of December 31, 2008.

While we remained in compliance with our 2005 credit facility, we recently amended the facility to accelerate the amortization of a portion of the outstanding commitment from October 26, 2009 to February 24, 2009 and to pledge the Genmar Defiance collateral under the facility. This had the effect of reducing our debt to collateral ratio under the facility’s covenants which is intended to bolster our continuing abilities remaining in compliance with these covenants. Accordingly, we now have availability of $850 million under our $900 million credit facility.

Turning to Slide 10, we provided fourth quarter 2008 operating expense analysis. To analyze expenses we will look at the cost per vessel day which adjusts for changes in size of our fleet. Per vessel day costs are calculated by dividing total expense by the aggregate number of calendar days that we owned each vessel during the period.

Daily direct vessel operating expenses increased by 11.9% to $7,871 per vessel day for the quarter ended December 31, 2008 compared to $7,032 for the prior year period. The increase was attributable to higher crew costs, insurance, and maintenance and repair costs.

Excluding the compensation accruals and litigation costs described earlier, general and administrative expenses increased 1.7% to $12.1 million for the quarter ended December 31, 2008 compared to $11.9 million for the prior year period.

Our outlook for 2009 is detailed on Slide 11. For daily direct vessel operating expenses, our guidance is $8,150 per day for Aframax vessels and $8,200 per day for our Suezmax vessels. These amounts represent an increase over 2008 actual expenses and are attributable to increased costs experienced industry wide associated with primarily crewing, insurance, and maintenance and repair.

We expect G&A for 2009 to be approximately $38 million. Of the total $38 million in G&A expense, $28 million is cash expense with a balance of $10 million being amortization and restricted stock, a non-cash expense. This amount represents a decrease from 2008 actual expense attributable to cost savings achieved by the company’s executive transition plan.

We project approximately $85 million in depreciation and amortization for 2009, higher than 2008 due to the increase in the size of our fleet. Finally, we estimate 320 offhire days for 2009 relating to four Suezmax vessels and two Aframax vessels in dry dock. Total cost associated with our 2009 dry docking program are anticipated to be $21.5 million and costs of $6.5 million are budgeted for capital improvements fleet wide.

On Slides 12 and 13 we provide a description of our dividend policy and our dividend history. The company has a fixed target dividend of $0.50 per quarter or $2.00 annually. The company intends to declare these dividends in May, August, November, and February of each year. We are pleased to have been able to declare dividends of over $1 billion since we first started paying dividends in May of 2005, including a one-time special dividend of $11.19 or $15.00 for old General Maritime shares and our recently declared $0.50 dividend relating to Q4 2008 payable on March 20, 2009 to shareholders of record as of March 6, 2009.

I’d like to conclude my remarks by going through an estimated 2009 break even summary which is on page 14, which demonstrates General Maritime’s financial position. With our substantial time charter coverage and approximately $250 million in 2009 contracted to time charter revenue, General Maritime has favorable free cash flow net income break evens.

Including our projected quarterly dividend, the company’s spot fleet would need to earn approximately $18,000 per vessel per day in order to break even.

That concludes my remarks and I’d like to turn the call back over to John Tavlarios.

John Tavlarios

Thank you, Jeff. Following a year in which General Maritime achieved significant fleet growth without increasing its leverage, we have maintained both a financial strength and commitment to continue to enter into future value creating transactions for shareholders. Building upon our past success, we intend to concentrate on areas which have served the company and its shareholders well in the past.

First, we’ll seek to draw upon our liquidity to further consolidate the industry and expand our fleet and earnings power. General Maritime has developed an unsurpassed track record of consolidating the industry and we are committed to remaining disciplined and entering solely into transactions that create enduring value for the company and its shareholders.

In actively pursuing this critical objective, we will not waiver from our proven approach of ensuring that future acquisitions continue to meet strict [inaudible] requirements. Beyond taking advantage of consolidation opportunities, we tend to continue to maintain an unrelenting focus on effectively redeploying General Maritime’s cash flow, a core component of it’s proven approach and successfully managing the company through the shipping cycles and maximizing return to shareholders.

As part of this effort, we plan to opportunistically repurchase shares. We believe our stock is undervalued and utilize our cash flow to further reduce debt until the right acquisition is identified.

Finally, we will seek to continue to create near term value by drawing upon General Maritime’s sizable contracted revenue stream and distributing dividends. Importantly, the company has maintained its fixed $2 per share dividend target which equates to an approximate 25% increase over the 2008 distribution that General Maritime shareholders received based on the exchange ratio in the Arlington tankers combination.

Turning to Slide 17, I’d like to briefly discuss current market conditions. With 67% of our available spot days booked for the first quarter, our Aframax fleet is averaging $26,000 per day. With 65% of our available spot days booked for the first quarter, our Suezmax fleet is averaging $17,344 per day. These spot days are related to the Genmar Gulf, our only spot vessel. The remainder of the Genmar Gulf’s voyage days are booked under short term time charter for $28,000 per day. The current Aframax TCE rates worldwide are in the low to mid $20,000 per day range. TCE rates for Suezmax tankers are around the $37,000 per day range.

Turning to Slides 18 and 19, we give a brief industry outlook. Tanker rates for the fourth quarter remained robust after a strong third quarter, leading to a full year average performance higher than any year since 2004. This positive result was achieved because of continuing favorable ton-mile trends and the fact that the fleet growth in the quarter and indeed for the entire year was essentially flat.

The completion of dry boat conversions begun before the downturn in the dry boat market and new building delays combined to offset additional supply. Of course, these positive factors were partially offset by lower worldwide demand for oil due to global recessionary conditions, but the net effect was that we had a very strong rate environment in 2008.

The progressively worsening economic environment in the fourth quarter was reflected in the IEA’s further revisions of estimates for global oil demand. Most recently released IEA statistics show a 0.3% decline in global oil demand, compared to its initial estimate of 2.3% growth at the beginning of the year.

In action to this lower demand environment to recent decreases in the price of oil, OPEC has implemented cumulative production quota cuts of 4.2 million barrels per day. These cuts, however, did not begin to effect tanker demand until after the end of the fourth quarter.

Looking ahead to 2009, we note that the IEA, OPEC, and other forecast global oil demand to once again fall somewhat between 0.6% and 1.2%. This marks a relatively significant change from our last call when the same groups called for a modest gain in demand for the year.

We remain of the opinion that the tanker industry faces significant overcapacity issues in advance of the IMO single hull phase out beginning in 2010. In particular, 2009 is the peak of the delivery cycle for the tanker fleet. According to PIRA, expected to grow more than 10%. This level of fleet growth suggests a lower rate environment in 2009.

However, thus far in 2009, the use of BLTC and Suezmax tankers for storage has increased demand and bolstered rates due to the arbitrage opportunity in the crude oil market. More recently, however, the Brent and WTI curves have flattened, suggesting that the source of demand would not be counted on to continue, at least to the same extent for the rest of the year.

Of course, the pace and timing of scrapping by owners of single hull tankers can have a significant effect on rates. While scrap rates have declined with the price of steel, it is increasingly likely that more owners would nonetheless choose to scrap earlier than required if operating rates remain low.

More importantly, whatever shape the curve takes, we believe more strongly than ever that General Maritime has properly positioned its fleet with substantial time charter coverage through 2010. This coverage provides low break even costs on our remaining spot employed vessels to cover all operating and financial costs as well as our expected dividend.

We believe this will position us to maintain a strong balance sheet, pay down debt, and when the appropriate opportunities are available, fund the acquisitions of new assets.

We would now like to open up the call for questions.

Question-and-Answer Session


(Operator Instructions) Your first question comes from Doug Mavrinac from Jefferies and Company.

Doug Mavrinac - Jefferies & Company

Just had a few questions for you all this morning. First, John, in your comments, clearly you guys mentioned that you’re positioned to cover just about all of your cash expenditures with your Suezmax and time charter contracts which requires only a minimal contribution from your Aframax fleet. Given the uncertain economic environment that we’re in and some of the challenges that you mentioned could be potentially facing the industry, is the current strategy that you guys are pursuing something you intend to keep since it does accomplish the goal of covering costs without sacrificing upside or do you think that there becomes a point where you start maybe considering locking up more days on your Aframax fleet with time charter contracts?

Peter Georgiopoulos

I think we would definitely lock up more days at the right numbers.

Doug Mavrinac - Jefferies & Company

Looking at your fleet and looking at a couple of the VLCCs that you all acquired from Arlington that are in time charter contracts until at least November, have you received any indication from the charter whether they strategically would prefer to continue to charter in those vessels given the shallow draft specification of those vessels or do you think that they’re going to wait to see what the market looks like come November and then decide?

John Tavlarios

I think they’re just going to wait it out. It’s just too soon for them to indicate what they’re going to do.

Peter Georgiopoulos

That being said, they designed and built these ships specifically for their own purposes and they made a pretty big splash about it so… Like John said, we haven’t heard anything yet.

Doug Mavrinac - Jefferies & Company

Just kind of sticking with those two specific VMAXes, do you have a preference on whether or not you would like to charter them out, assuming that they don’t re-charter them. Is it your preference to put them away on time charter contracts like your Suezmax fleet or keep them in the spot market like your Aframax fleet or is it still too early to tell?

John Tavlarios

Wherever we earn more money. Like Jeff just whispered, it’s too early to tell. I think we’ll assess that situation as we get closer to the date.

Doug Mavrinac - Jefferies & Company

John, you mentioned that you all have always been opportunistic consolidators of the sector. Excellent track record. In looking at your time charter coverage, your available liquidity which Jeff mentioned under your credit facility, how do you see acquisition opportunities potentially playing out in the coming months in terms of either one off vessel values maybe becoming more attractive or even corporate acquisitions with guys that aren’t as positioned as well as you all are?

John Tavlarios

As you’ve seen us in the past, we sort of look at opportunities whether it’s one-off as we had done with the [Daffne] of the electro or whether it was Arlington. I think we look at opportunities and we don’t think it’s now… We’re sort of on the sidelines watching but we monitor opportunities, see how we can creatively put something together.

Peter Georgiopoulos

If you look at Arlington, what’s interesting about that is there we increased the fleet. We also increased our time charter coverage and reduced our leverage. So when we look at things it’s not necessarily going and paying cash and levering up and taking bigger risks. Sometimes you can grow the company and in that case we de-lever a little bit, so we think we look at all kinds of opportunities.


Your next question comes from Natasha Boyden of Cantor Fitzgerald.

Natasha Boyden - Cantor Fitzgerald

Clearly there’s been a lot of [inaudible] walking away from charters in the dry boat market. Just wanted to make sure that there’s been no issue with that over on your side of the business.

John Tavlarios

No, nothing.

Natasha Boyden - Cantor Fitzgerald

So nobody’s come forward and you feel very confident with your [inaudible] going forward?

John Tavlarios


Natasha Boyden - Cantor Fitzgerald

And with the banks, as [inaudible] have been coming down a little bit, I think on the tankers side, they’ve certainly held up much better in comparison to dry dock vessels, but can you tell us if you’re in compliance with your value maintenance covenants?

John Tavlarios

Yes, absolutely.

Natasha Boyden - Cantor Fitzgerald

And you would say that [inaudible] before you would even get close to being in violation then?

John Tavlarios

Correct. We have a long way to go.

Natasha Boyden - Cantor Fitzgerald

Just really wanted to look on the cost side of things, given I think in the past we’ve talked a lot about DVOE costs going up significantly, what is your kind of outlook for that going forward? Do you think the industry is still going to experience significant pressure on that or do you think that’s going to subside somewhat given the economic downturn?

John Tavlarios

If you take a look on the DVOE, other than maintenance and repair, the other two driving costs was crewing and insurance. On the insurance side, all of these insurance, the P&I clubs and the hull and machinery side, on their cash reserves, have taken a hit in the market, so they’re trying to make it up somewhere and I think industry wide, the trend is going to be upwards. Having said that, all the renewals are being done now and completed now, so I think what numbers you are going to see are going to be the same for the balance of the year.

On the side of crewing, that’s been something industry wide. There has been an upward trend. But we don’t see much of an increase in the balance of this year. We budgeted for this year, I think it’s going to be pretty fixed throughout the year.

Natasha Boyden - Cantor Fitzgerald

And more of a macro question, there’s been a recent announcement that China has agreed to lend $10 billion to Petrobras in exchange for a long term oil supply agreement. Given that, what’s your outlook for the Caribbean market going forward? Do you think this is going go divert oil supply usually destined for the US market?

Peter Bell

I don’t really see it diverting supplies into the Caribbean market. I think that’s going to be in addition to what we already see so I don’t see it –

John Tavlarios

If it did it would be a good thing because from Brazil to China is a lot farther to ship from –

John Tavlarios

And some more ton-miles.

Natasha Boyden - Cantor Fitzgerald

I was just thinking more in terms of your business because you typically operate freight in the Caribbean, is that correct?

Peter Bell

It’s taking ships out of the Caribbean –

Natasha Boyden - Cantor Fitzgerald

Right. Okay, fair enough.


Your next question comes from Daniel Burke of Clarkson Johnson.

Daniel Burke – Clarkson Johnson

Just to clarify, the Electra is the remaining unencumbered vessel in the fleet?

John Tavlarios


Daniel Burke – Clarkson Johnson

I apologize if I didn’t hear this. How much are you going to pay down under the accelerated amortization on the facility?

John Tavlarios

We don’t have to pay down anything. It’s a reduction in the overall availability from $900 million to slightly more than $50 million so it goes from $900 million to just under $850 million.

Daniel Burke – Clarkson Johnson

I see, that was my misunderstanding.

John Tavlarios

It was a step down in commitment that was going to happen anyway in October, we just accelerated to now. It takes away very little and actually saves us a little money as we said in our comments. It bolsters our cushion on the loan to value.

Daniel Burke – Clarkson Johnson

I think your last synthetic time charter rolls off this year as well I believe. How attractive has that experience been vis a vi physical coverage? Is that something you’ll look at if the price is right again or are you more looking towards the physical market for fleet coverage in the future?

John Tavlarios

It works, absolutely, but it does roll off June 30 this year. It works but every quarter we announce unrealized gains or losses as well as the realized gain or loss, and the realized part is probably easier for you all in the analyst community to forecast. The unrealized part is probably very difficult to forecast. It’s really arcane. That’s been a little bit of a distraction. So we would take that factor into account in looking at this in the future I would say.

Daniel Burke – Clarkson Johnson

I know you’re mostly active in the Atlantic and the [inaudible]. You mentioned you’ve got vessels through the Black Sea and the Far East. How many are operating in total on spot voyages ex the Atlantic Basin? Is it two or more than that?

John Tavlarios

In terms of our spot exposure, it’s one ship in the Far East.


Your next question comes from Scott Burk of Oppenheimer.

Scott Burk - Oppenheimer & Co.

I did have a question on the FFA. The $1.3 million realized loss for the quarter was a little bit higher than I expected. It seems to… because the spot rate was pretty close to what charter it was, a few thousand dollars and then you add that $1.3 million spread. Can you talk a little bit about what caused that and what we might see in the first quarter?

John Tavlarios

We gave guidance on that I think at the Investor Day, so we had given you a heads up on that, and it relates to what the Baltic numbers are for a given period of time less the contracted amount for the synthetic charter which is $35,500 a day. So it doesn’t relate to anything else in our company, it just relates to what is the reported Baltic numbers minus $35,500 times the number of days, it gives you the realized loss.

Scott Burk - Oppenheimer & Co.

Sorry I forgot about that. I had a question about the positioning of the Aframax fleet also. The Caribbean rates, at least what we’ve seen tracked in the spot market, have been fairly weak the last month or so. Have you repositioned vessels away from that market because of that? I noticed that the day rates you’re talking about for the quarter are actually quite a bit higher than what the current spot rates are.

Peter Bell

We have not ballasted it away from that market. That is the market that we consider important to us. We have customers that we serve there and we find that chasing these markets often leads to moving from one form into another one. We are seeing some ships ballasting out of the Caribbean market now and that’ll pull it up, so it will equalize over time.

Scott Burk - Oppenheimer & Co.

You talked about OPEC production cuts already. Just wondering if you’re seeing on the demand side for your tankers, we have seen the gasoline margin improving. Are you seeing any signs for an improvement in oil demand or do you just kind of stick with the IEA forecasts that we’re still going to have kind of declines throughout the year?

John Tavlarios

We’re not seeing anything different than anyone else.


We have no further questions at this time. I will now turn the conference back to our presenters for any additional or closing remarks.

John Tavlarios

We are pleased to have recorded another year of strong financial results while continuing to meet our dividend target and entering in a transaction which we believe will create long term shareholder value.

During a time when we have targeted a $2 per share dividend which is backed by our contracted revenue stream, we remain committed to utilizing our liquidity for the benefit of the company and its shareholders. We’ll continue to seek opportunities to consolidate the industry and we’ll act opportunistically to repurchase our shares and reduce our debt.

We look forward to providing an update in the future. Thank you.


This does conclude our conference. Thank you all for your participation and have a great day.

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